Physical Gold

[1nvest]

In my view, one of the main reasons to buy physical gold is for the long term AND just in case we have very unpleasant economic issues. Like hyperinflation or extreme levels of taxation.

If you follow the Dow-Gold ratio (*) then gold is relatively (17x) very cheap currently, but you will need the patience of a saint before you start buying stocks again.

(*) see https://www.bullionvault.co.uk/gold-new ... buy%20gold.

Rather than being all in stock for x years, all in gold for y years, averaging x / ( x + y ) time averaged stock exposure, just holding 50/50 or whatever is less concentration risk and can work out much the same. Own a UK home (£), opt to hold 50/50 US stock/Gold ... where all three are around equal £££ value, and for just the stock/gold 50/50 yearly rebalanced that yielded the same total return as the UK FT All Share between 1896 and 2022. Whilst being diversified across Pounds, Dollars and Global (gold) currencies, and asset diversity of land, stocks, commodity.

A nice feature with 50/50 stock/gold is that in some years stocks are the best, other years gold is the best, and where the average of the two in real terms is positive. You in effect are more inclined to capture the arithmetic average than the geometric annualised. Stocks up +25% gold down -20% one year, stocks down -20% gold up +25% the next, and both individually compound to 0%, whilst 50/50 of the two actually captures the 2.5% positive arithmetic average. Stocks pay dividends, gold doesn't, so attribute that 2.5% 'trading' gain to gold, and that's like the 50% gold weighting having paid a 5% dividend, much the same as the 5% stock dividend. Not as clear cut as that in practice, but along those lines



2008 financial crisis for instance, gold up near +40% when stocks down -40%, so you drew income such as SWR from gold that year, whilst also having sold some gold to buy more stock shares. More often one or the other is up that year, so you're selling some out of gains to source a income, that's not always the case however and in some years both can be down (or both up), often when such a year occurs a adjacent year tends to have one or the other having done better than usual (compensates). So more broadly you get a smoother growth progression line than either gold, or stocks alone. Similar reward to stocks, but with less volatility (higher Sharpe/better risk adjusted reward).

[1nvest]

Millennia ago the ancient Talmud advocated for security diversifying by dividing ones wealth into thirds, one third buried in land, another third in business, a third in-hand. In modern day terminology perhaps a UK home (land), US stocks, gold buried in a vault in Australia/Singapore/Switzerland/wherever.

Bank runs, geopolitical risks such as punitive taxation, wars, regional devastation ... total losses of one of the three, and the risk/reward profile is pretty good. It's not unreasonable to anticipate a 3.33% yearly real gain benefit IMO, so a 1 in 12.5 year total loss of one of the three still has wealth having been maintained

(1.033^12.5) * 0.666 = 1.0

More typically, the total loss of your land/home, or stock, or gold once in every 12.5 years is most unlikely. Maybe even less rare than once per century.

In contrast if all of your wealth is in UK home, you just held ETF's listed in Ireland (a relatively small distance away) and Putin opted to wipe out the UK with a new superdooperlooper bomb as a example case whilst you were on holiday in the US - then you're family are left stranded, destitute - and as being homeless is now illegal in the US, where repeated fines lead to imprisonment (that the US encourage - as prisoners make up a sizeable number of the US's low paid workforce), then you might be glad if the neighbour friends you'd travelled with still had two thirds of their wealth in US based stocks and gold in Australia/wherever and offered to help you out.

Unlikely (hopefully) but much can happen during a typical 30 year retirement horizon.

[CliffEdge]

Millennia ago the ancient Talmud advocated for security diversifying by dividing ones wealth into thirds, one third buried in land, another third in business, a third in-hand. In modern day terminology perhaps a UK home (land), US stocks, gold buried in a vault in Australia/Singapore/Switzerland/wherever.

Bank runs, geopolitical risks such as punitive taxation, wars, regional devastation ... total losses of one of the three, and the risk/reward profile is pretty good. It's not unreasonable to anticipate a 3.33% yearly real gain benefit IMO, so a 1 in 12.5 year total loss of one of the three still has wealth having been maintained

(1.033^12.5) * 0.666 = 1.0

More typically, the total loss of your land/home, or stock, or gold once in every 12.5 years is most unlikely. Maybe even less rare than once per century.

In contrast if all of your wealth is in UK home, you just held ETF's listed in Ireland (a relatively small distance away) and Putin opted to wipe out the UK with a new superdooperlooper bomb as a example case whilst you were on holiday in the US - then you're family are left stranded, destitute - and as being homeless is now illegal in the US, where repeated fines lead to imprisonment (that the US encourage - as prisoners make up a sizeable number of the US's low paid workforce), then you might be glad if the neighbour friends you'd travelled with still had two thirds of their wealth in US based stocks and gold in Australia/wherever and offered to help you out.

Unlikely (hopefully) but much can happen during a typical 30 year retirement horizon.

Unfortunately you're right about Putin: the UK is the most likely place to be totally wiped out. The US would do a deal to avoid global Armageddon. The risk is real.

[1nvest]

Unfortunately you're right about Putin: the UK is the most likely place to be totally wiped out. The US would do a deal to avoid global Armageddon. The risk is real.

Don't lose sleep over that concern. There have been many a call to wipe out/nuke the UK within Russia, with multiple different news items - such as how a automated Russian sub carrying a single missile could strike underwater NI and cause a radio active Tsunami wave to kill the entire UK (along with entire Ireland and some overflow into mainland Europe shores). From a Russian perspective wiping out a small northerly European bunch of islands (British Isles) to set a example/challenge to the US/others who as you say would likely back down from the brink, is however addressed by the UK's capacity to induce global Armageddon alone. Remnants of the British Empire days still has the sun never setting on its expanse, albeit just small islands dotted around the world. Along with subs and ships also dotted around the world and Putin would be challenging British deterrent/resources. The PM's nuke's launch code box is more a ping box, doesn't actually require the PM to enter codes and press buttons, rather in the event of a failure for it to respond to a ping along with other confirmatory factors (media channels/whatever indicating a strike against the UK, no voice or other contact with the PM/others) single vertical missile launches to disperse multiple nasties into the atmosphere/jet stream would disperse and wipe out the entire human race (persistent and highly contagious assured mutual destruction). A simple whisper in Putin's ear to that effect is enough to dissuade the 'real threat' from a 'mightier/larger' Russia and serve as a deterrent.

[CliffEdge]

I believe the UK can only launch with the permission of the US. Cf. France.

[1nvest]

I believe the UK can only launch with the permission of the US. Cf. France.

No, the UK missiles/nukes are independent, conceptually could even be launched at the US, the President doesn't have some over-riding button or suchlike.

https://www.gov.uk/guidance/the-uks-nuc ... -the-facts

As a deterrent nukes are vintage, 1960's and earlier 80+ year old technology, requiring many to devastate a large land mass such as Russia. As a concept however nukes continue to work 24/7 as a commonly known deterrent against extreme aggression.

[CliffEdge]

I believe the UK can only launch with the permission of the US. Cf. France.

No, the UK missiles/nukes are independent, conceptually could even be launched at the US, the President doesn't have some over-riding button or suchlike.

https://www.gov.uk/guidance/the-uks-nuc ... -the-facts

As a deterrent nukes are vintage, 1960's and earlier 80+ year old technology, requiring many to devastate a large land mass such as Russia. As a concept however nukes continue to work 24/7 as a commonly known deterrent against extreme aggression.

Thanks. That is a very useful link. Seems crazy for us to give up our deterrent then, if it's truly independent. Be better to modernise it so it doesn't go off accidentally.
Seems mad to argue that we should get rid of it and leave ourselves defenceless.
Would be mad to start a nuclear war but it seems there are mad men not very far away who very well might. How can anyone support CND then? When we're so vulnerable.

[1nvest]

1896 to recent and thirds each UK home, US$ hard dollar bills, gold ... negated UK inflation.

US$ 1 million in $1 dollar bills weighs around 2200 pounds, whereas US$1M in gold weighs around 34 pounds. in $10 dollar bills 220 pounds weight, in $100 dollar bills a more comparable 20 pounds weight.

100% old custodial banking style, rather than present day depository banking where any money you deposit into a bank becomes the banks money, as does any money you deposit into a brokerage (they buy the shares you like, in their name).

Worth accepting some counter-party risk however, invest the US$ into US stocks and you can liquidate in T+2 time, and stocks tend to earn/reward more than hard US$ bills.

Your primary home and imputed rent incur no taxation.
Britannia gold coins are legal tender so there's no capital gains tax
US stocks inside a ISA and again no tax

3 currencies, £, $, global (gold), three asset, land, stocks, commodity. Reduced counter-party risk.

Yes the spreads on gold can be 3% or more, but so also can FX costs for stocks. Inside a ISA you're not allowed to hold foreign currencies so if you buy a US stock ETF that trades in US$ you'll typically pay a 1.5% FX cost to buy, and another 1.5% FX to sell. The inclination being to find less expensive alternatives, such as holding VUAG. Similar for gold, cut out the middle man and you might buy and sell at spot (0% spread).

[1nvest]

All of the activity/price gains in gold this/last week, and not a murmur here!

Looks perhaps to be down to the US looking to seize 300Bn of Russian assets and Russia responding by swapping out some US treasury's for gold in response, over 100Bn worth, 1500 tonnes (to increases its gold reserves from 3000 tonnes to 4500 tonnes). All played via a third party (to work around sanctions) i.e. perhaps Zimbabwe. Seemingly targeting the purchases via Options (so can demand physical delivery instead of cash settlement upon expiry).

More usually state entities purchase gold at the gold fix times, these large purchases however have been distributed across the business day. Up from £1600 to £1950 per ounce type price movement (>20% gain in less than a week).

Price look to be dropping back down again, I guess its the Option Writers (sellers) that are panic manipulating market price in order to obtain physical gold ahead of Option expire dates when they'll be expected to deliver the physical gold. I suspect that the current 122:1 paper-gold to physical gold ratio will see that figure increase over coming weeks/months. Fiat is great, you can just conjure up more money/gold out of thin air.

[Lootman]

All of the activity/price gains in gold this/last week, and not a murmur here!

I know, people hate gold which is why i love it. Hard to look at crypto going up and not think that gold is next.

20% up YTD and some of the miners have done better, like Agnico-Eagle. Can't really go wrong with Newmont or Barrick either.

[1nvest]

All of the activity/price gains in gold this/last week, and not a murmur here!

I know, people hate gold which is why i love it. Hard to look at crypto going up and not think that gold is next.

20% up YTD and some of the miners have done better, like Agnico-Eagle. Can't really go wrong with Newmont or Barrick either.

The US dollar is still broadly aligned to gold, but rather within channel ranges. The US treasury own 8000+ tonnes, that it leases to the Fed at $42.2222/ounce, so at a $2111/ounce price the fed has 50x leverage potential to long or short gold to keep it aligned to the dollar (align the dollar with gold).

The next biggest holder is ... the UK, with 5000 tonnes in its vaults. But that is mostly 'lent' out, owned by others ... on paper. But with 122 times more paper gold than physical gold its reluctant to repatriate any of that gold, and possession is 9/10th as they say. Combined = West/capitalism, that places the UK in a relatively strong position (leverage). All a remnant from when the Pound/gold was the primary international trade settlement currency and London was the accounting/law/financial hub of the world (central time zone).

[spasmodicus]

The next biggest holder is ... the UK, with 5000 tonnes in its vaults.

It's slightly confusing, because UK's gold reserves are quoted here as being a mere 310.29 tonnes.
https://uk.finance.yahoo.com/news/much-gold-does-uk-own-160100142.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAABAJUVaTTJwVlIdjw6o4aZBO5MD3AQ02z7ts3LWC-zpsj0JmAqpoZgEovJ5IexxkCNyyXRLmwTDlZS18KNUcIX-3sZinP-cb7VXHdGWjs7uDsVMP24C0v69CeaVVcmX1MB__EaPB498X5f67aeuA4gmvr8Hdq42TxAWegrlCvyVB&_guc_consent_skip=1713000162

but the article says Many countries choose to store their gold in the heavily fortified Bank of England vault, the second largest in the world after the vault at the New York Federal Reserve.

So it's not really ours. But when push comes to shove, is possession 9/10ths of the law and Is our army up to the task of defending the BOE's vaults? You could ask a similar question about personal holdings of the yellow metal. And will those ETFs like GLD (which I hold) really be any better than Bitcoin in a global financial meltdown?

S
(better buy a Kalashnikov along with that gold bar?)

[kempiejon]

I think with a Kalashnikov you don't need to start with your own gold.

[1nvest]

So it's not really ours

Debatable/subjective. https://usdebtclock.org/gold-precious-metals.html suggests that recently there's 122 times more paper-gold than physical gold - so whose gold is it? Who/how might that decision be made. Possession being 9/10th's = UK could decide to prioritise all British paper-gold claims on physical gold ahead of others (perhaps preceded with a big purchase of gold Options/Futures (paper gold) that redeemed 5000 tonnes in physical gold). Many would be furious, but as about as equally angry as if it were proportioned and each received just 0.8% of their claim. The same contested international legal battle would equally apply to other vaulted gold, is all of the gold in US Fort Knox, Germany, France ...etc. actually theirs.

The collapse of derivatives would with near certainty mean global warfare/collapse of society. As-is = stability. Resistance to that gold being moved or otherwise risk inducing arguments/war/collapse. If one claims that they have 1000 tonnes, on paper, and they want that amount moved to their homeland, the counter argument is that there are many others also with a claim upon that gold so none will be released until firm evidence is presented that the others have relinquished their claim.

[1nvest]

I know, people hate gold which is why i love it. Hard to look at crypto going up and not think that gold is next.

20% up YTD and some of the miners have done better, like Agnico-Eagle. Can't really go wrong with Newmont or Barrick either.

The US dollar is still broadly aligned to gold, but rather within channel ranges. The US treasury own 8000+ tonnes, that it leases to the Fed at $42.2222/ounce, so at a $2111/ounce price the fed has 50x leverage potential to long or short gold to keep it aligned to the dollar (align the dollar with gold).

The next biggest holder is ... the UK, with 5000 tonnes in its vaults. But that is mostly 'lent' out, owned by others ... on paper. But with 122 times more paper gold than physical gold its reluctant to repatriate any of that gold, and possession is 9/10th as they say. Combined = West/capitalism, that places the UK in a relatively strong position (leverage). All a remnant from when the Pound/gold was the primary international trade settlement currency and London was the accounting/law/financial hub of the world (central time zone).

Given that both the US and the EU are hostile towards the UK, and the global shift towards de-dollarisation, combined 5000 tonnes of gold in London, 2200 tonnes China, and more recent increase of Russian gold from 3000 tonnes to 4500 tonnes, that's near 12000 tonnes in total, 50% more than the US's 8000 tonnes, upon which a alternative to the US dollar could be formed/based.

The UK jumping into Ukraine on a PM (BJ) whim to look like Churchill was a mistake, a costly one at that as its induced high inflation/costs upon many. Shouldn't IMO have been so easy for one to commit the UK in such a manner. On the flip side the UK would have been awash with Russian money and have access to very inexpensive raw materials and energy; At a cost of alienation by the US (where Biden hates Brits anyway) and the EU (that have sought to penalise the UK at every opportunity).

As with potential 8000 tonnes of US gold being leased to the Fed at $42.2222/ounce such that the fed has around 50x leverage, a combined 12,000 tonnes at 1/122 of the market price of gold (in reflection of 122 times more paper gold than physical gold) could back a RYP (Ruble/Yuan/Pound) or whatever name currency. At a recent £1800/ounce type market price of gold, around £15 ounce (120x leverage factor). As with the US dollar to keep that RYP aligned with gold its instead easier to align the market price of gold to the currency (use the leverage to buy/sell gold to direct its price into alignment with the currency).

US greed has been costly. Families moved from one working, one housewife, 5 day 9-5 working week, house costing 3x annual wage to where families have both working, covering 24/7 hours, 9x single wage house prices. The benefits haven't been shared, wealth is being retained by a small number, largely that live within the US, that direct elected MP's/representatives.

Socially I suspect the former UK tendency to kill 100,000+ of its own by exporting Covid into care homes, and all of the monitoring of your financial transactions/wealth along with your movements (geolocation), facial/number plate recognition, thoughts (calls/internet activity) would be little different if we distanced from the US/EU open prison society. Both Russia and China have similarly bad highlights. But where financially/economically the UK could be far better off in general. Combined < 1Bn US/Canada/EU populations = < 12.5% of the total global population, more of a niggle factor than a critical factor should relationships turn sour.

Fundamentally mid to longer term its better to be aligned to the winning side, those on the losing side endure great hardships. France/Macron was trying to cosy up to Russia until he got a face slap and U-turned, but at least he had some foresight in contrast to BJ's idiotic I'm a second coming of Churchill headlong dash.

[Kantwebefriends]

Millennia ago the ancient Talmud advocated ...

The Talmud is not millennia old.

[CliffEdge]

Millennia ago the ancient Talmud advocated ...

The Talmud is not millennia old.

Not my quote old boy, I've never heard of the Talmud.

[Padders72]

Take dogmatic investment advice from some dusty scrolls written a jolly long time ago? And they say HYP is followed by zealots! They lost me with the suggestion that bacon sandwiches are to be frowned upon.

[moorfield]

Always believe in your soul.

[GoSeigen]

Millennia ago the ancient Talmud advocated ...

The Talmud is not millennia old.

Okay, I'll bite but let's keep this brief... how old is the Talmud, and who is your authority?


GS